Kitsault energy plan could include oil pipeline terminal

The American millionaire who bought a ghost town north of Prince Rupert says his plans to turn the town of Kitsault into an energy hub could include a heavy oil pipeline terminal and refinery.

Krishnan Suthanthiran, who bought the abandoned mining town of Kitsault in 2005, plans to hold a press conference Tuesday in Ottawa, where he will sketch out his plans for transforming the remote town at the head of the Alice Arm – a branch of Observatory Inlet – into a shipping port for oil and gas.

As reported on Friday, Suthanthiran is focused mainly on making Kitsault a third option for exporting liquefied natural gas. There are already plans for LNG plants and export terminals in Kitimat and Prince Rupert.

But he said the village, which is on tidewater, could also become a terminal for exporting oil from Alberta.

That could be a hard sell in B.C., where pipelines proposed by Enbridge Inc. (TSX:ENB) and Kinder Morgan Inc. (NYSE:KMI) have generated considerable public opposition, especially among First Nations, who have been more receptive to natural gas pipelines and LNG plants.

“It doesn’t need to be a heavy oil pipeline,” Suthanthiran told Business in Vancouver. “It could be one of many things you could do. We’re looking at LNG, we’re looking at a number of things. This is just an early stage of exploring options.

“We’re basically saying Kitsault would be ideal because it would be a dedicated terminal. Our goal is to reach out to the users – customers in Asia and other parts of the world – and the energy companies and the First Nations communities and see what can be done.”

Suthanthiran estimates the cost of turning Kitsault into an energy hub to be $20 billion to $30 billion.

Originally when Suthanthiran bought Kitsault, his plan was to turn the village into a kind of eco-oasis, to be used by scientists and artists. But the village remains vacant, except for a maintenance crew that has been fixing roofs, keeping vegetation trimmed and generally maintaining the town.

Kitsault was built as a mining town but was depopulated virtually overnight when a molybdenum mine shut down in 1982.

With 100 single-family homes, 150 apartment units, a school, pub and community centre, the village is ready for occupancy – it just lacks an industry.

Suthanthiran’s proposal isn’t the only industry that could potentially bring the village back to life. Avanti Mining Inc. has been working since 2010 on a plan to reopen the Kitsault mine.

See next week’s issue of Business in Vancouver for more coverage of Kitsault.